Government put loan sale hopes in securitisation
Today’s Budget contained little new on the loan sale but the OBR confirmed that the Office for National Statistics will make a decision on whether the securitisation has achieve full risk transfer.
This morning, Jo Johnson set a written statement before parliament in which he confirmed that the government is ‘starting the process to sell part of the English student loan book’. (A sale will not affect borrowers from the rest of the UK).
Although the intention to sell has been announced several times in recent years, what today marks is the start of a formal process through which government tries to woo purchasers with a specific set of products. It may now take months before a final decision on a sale is made and any proceeds are announced. This decision is subject to a value for money test being passed, but this test can be passed if even the sale makes a significant loss for government (more on this below).
What is most significant about today’s announcement is that the government has shifted its position regarding the sale structure.
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